The heterogeneous hydraulic conductivity (K) in water‐bearing formations controls subsurface flow and solute transport processes. Geostatistical techniques are often employed to characterize the K distribution in space based on the correlation between K measurements. However, at the basin scale, there are often insufficient measurements for inferring the spatial correlation. This is a widespread problem that we address in this study using the example of the Betts Creek Beds (BCB) in the Galilee Basin, Australia. To address the lack of data, we use a 1D stochastic fluvial process‐based model (SFPM) to quantify the total sediment thickness, Z(x), and the sandstone proportion over the total thickness, Ps(x), in the BCB. The semivariograms of Z(x) and Ps(x) are then extracted and used in sequential Gaussian simulation to construct the 2D spatial distribution of Z(x) and Ps(x). Ps(x) can be converted to a K distribution based on classical averaging methods. The results demonstrate that the combination of SFPM and geostatistical simulation allows for the evaluation of upscaled K distribution with a limited number of K measurements. Copyright © 2015 John Wiley & Sons, Ltd.